The Government has been accused of dragging its heels over plans to encourage more people to save for retirement through a works pension.

Steve Webb, the former Pensions Minister who oversaw the introduction of auto-enrolment in late 2012, says the recommendations announced today to extend the regime to more workers are ‘shockingly lethargic’.

‘This pedestrian pace of reform risks creating a lost generation of people in their late 40s who will simply be unable to afford to retire,’ he adds.

Pressure: Pensions Minister David Gauke is told that pace of change is too slow

Webb’s ire is centred on the fact that the plans outlined by David Gauke, Secretary of State for Work and Pensions, will not be implemented until the ‘mid-2020s’, meaning millions of workers will still not be automatically enrolled into their employer’s pension fund.

These ‘excluded’ workers will include the low-paid, those with a number of poor paying jobs, and those under the age of 22.

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A Conservative manifesto commitment to bring the self-employed into the auto-enrolment net has also been ignored, although the Government says it will look at ways in which ‘technology’ can be used to encourage the country’s 4.8million army of self-employed to increase their pension saving.

Some nine million workers are now saving into a pension for the first time as a result of auto-enrolment – with their payments topped up with tax relief and an employer contribution.

Although they have the right to opt out, few do. The key proposals included in the auto-enrolment review will result in both more workers being drawn into pensions and employees saving more than currently.

The age below which workers are excluded from auto-enrolment will drop from 22 to 18, a move benefiting women in particular because it will give them more time to save – making good the periods they take time out of the workplace to have children or look after elderly parents.

Also, the slice of annual earnings (currently between £5,876 and £45,000) used to determine the amount of contribution that ends up in someone’s works pension fund will widen with the dropping of the lower earnings limit.

The Government says these respective measures will help introduce 900,000 young people into pensions and bring an extra £2.6billion into pension saving. Gauke says: ‘We are committed to enabling more people to save while they are working so that they can enjoy greater financial security when they retire.’

The Government’s decision to delay the reforms until the mid-2020s has probably been prompted by concerns over a possible backlash from businesses which will have to pay more in pension contributions as a result. Many companies are fearful of an economic hiccup resulting from Brexit.

Neil Carberry, managing director of lobby group the Confederation of British Business, says a timeline of the mid-2020s for the new proposals is ‘sensible’ and would ‘enjoy business support’.

How does auto enrolment work now?

The Government's auto-enrolment initiative has led to a resurgence in pension saving over the past few years.

Workers aged between 22 and state pension age and earning at least £10,000 a year from one job are now automatically signed up for a pension, unless they make an active move to opt out.

The total minimum auto-enrolment payment is currently 2 per cent of salary - split between contributions from individuals and employers and tax relief from the Government - although it's set to rise in stages to a total of 8 per cent in 2019 (see the table below).

Who pays what? How pension contributions stack up under auto-enrolment schemes (Source: The Pensions Advisory Service)